Cargill is one of the world’s largest cotton traders and marketers, while Autauga is a small but longtime ­Cargill customer. Autauga claimed Cargill breached its contract by leaving the co-op’s cotton unprotected and unhedged against price swings in a volatile market.

The contract stipulates that any disputes be resolved by binding arbitration through the Memphis Cotton Exchange. Last week, the Cotton Exchange determined that Cargill didn’t breach its deal with Autauga.

“As per the written contract, Cargill had total freedom in the marketing of Autauga’s cotton as best it could and did so with the information it had and the market reactions at the time,” said the Cotton Exchange ruling, which is posted on Autauga’s website. “Cargill did not leave Autauga’s cotton unprotected or unhedged,” according to the ruling.

The contract in question was for the 2011 marketing year. a time when the global cotton market was in ­turmoil. Prices began rapidly rising in late 2010, hitting a ­historic peak in April 2011, only to sink the rest of the year.

Cargill had received information about Chinese cotton imports that it believed would have a negative effect on hedges it had put on Autauga cotton, the ruling said.

The futures market was reacting “violently,” so Cargill replaced Autauga’s futures positions with cash sales. “Cargill agreed that, with hindsight, the decision to act was not a good one but it did the best it could given the information it had,” the ruling said.

Cargill spokesman Mark Klein said, “We felt that we would prevail, and we are pleased that we indeed did prevail.”

On its website, Autauga told members that “we are sadly disappointed and vehemently disagree with [the Cotton Exchange’s] decision.” In an interview, Jeff Thompson, Autauga executive vice president, said the co-op can’t appeal the ruling within the Memphis Cotton Exchange.

However, Autauga is “trying to determine what other options we have.” Autauga, whose members farm 400 acres on average, had been a customer of Cargill and a predecessor company since 1967. The co-op terminated its services with Cargill at the start of 2012, Thompson said.